EU finance ministers discuss Cyprus bailout

European Central Bank President Mario Draghi, left, speaks with Greek Finance Minister Yannis Stournaras during a meeting of the Macroeconomic Dialogue Group prior to a meeting of the eurogroup ministers in Brussels on Monday, March 4, 2013. The eurogroup finance ministers are set to discuss details of a bailout for cash-strapped Cyprus, further steps of assistance for Portugal and Ireland as well as the controversial issue of direct banking recapitalizations through Europe's permanent rescue fu
— AP

European Central Bank President Mario Draghi, left, speaks with Greek Finance Minister Yannis Stournaras during a meeting of the Macroeconomic Dialogue Group prior to a meeting of the eurogroup ministers in Brussels on Monday, March 4, 2013. The eurogroup finance ministers are set to discuss details of a bailout for cash-strapped Cyprus, further steps of assistance for Portugal and Ireland as well as the controversial issue of direct banking recapitalizations through Europe's permanent rescue fu
/ AP

More controversy was expected on the issue of defining the conditions of when Europe's new permanent bailout fund ESM will be allowed to directly prop up ailing banks. Ireland and others - who have dumped billions of euros into recapitalizing banks in the wake of the 2008-2009 financial crisis - want the fund to include past bank bailouts.

The idea is "to compensate Ireland for the recapitalizations that we made when the policy instruments that are now being put in place for other countries weren't available," said Irish Finance Minister Michael Noonan. "There's a valid case for that."

But Germany, the bloc's largest economy, remains staunchly opposed to the idea of using taxpayers' money to retroactively fund bank bailouts in other nations, saying the available funding is limited and the instrument can therefore only be used in future banking crises once the bloc also has centralized bank oversight.